Just in time for a recession, the debt collection industry is working to shed its reputation for remorselessly hounding people.
Oh, the collectors still want the money. But now they would like to be seen as helpful and sympathetic, even a force for good.
They have started calling the indebted "our customers." They are pushing consumer tips on the ideal way to respond when a collector comes calling (basically: pay up). They note that debt collecting is an old American tradition. (Abraham Lincoln was a debt collector, some histories say.) They point out how, in a time of rising unemployment, they are hiring.
"Collectors actually care about consumers," said Rozanne Andersen, general counsel of ACA International, the main industry trade group. "They want to teach consumers how to get out of debt. They’re trying to put themselves out of business."
If so, they are doing a poor job. So many people are in so much debt that the government says bill collecting is one of the fastest-growing businesses. By 2016, employment in it is projected to exceed half a million workers, up 23 percent in a decade.
When that projection was made in 2006, the times seemed comparatively good. Many Americans were paying their bills by refinancing their homes. That era is rapidly receding as home equity shrinks, foreclosures spiral upward and credit card defaults increase.
Figures are scant on the number of debtors or how much they owe, but it is clear that even mild downturns can push millions toward insolvency. The number of borrowers who were at least four months behind on a credit card, auto, house or installment loan doubled after the 2001 recession, to nearly seven million, according to credit bureau data analyzed by a Federal Reserve economist.
When a bill goes unpaid, the credit card company, hospital, store or other creditor usually makes efforts to collect. If that fails, the debt is assigned for collection or sold outright to third-party agencies. In 2005, 150,000 such debt collectors took in $51.4 billion, a PricewaterhouseCoopers study indicated.
A weak economy yields more work for third-party collectors but not necessarily higher revenue because unemployed debtors as a rule cannot pay. The industry thinking is that if collections can be made less adversarial, the success rate may go up.
"Most of our customers want to pay," said Gary Wood, president of DBA International, a group of debt buyers and collectors. "We want a relationship that will enable the customer to satisfy their need to pay what they owe and at the same time enable us to feed our families."
ACA International, through its foundation, is developing a personal financial management course, which it plans to post on its Web site next month and promote in national newspaper advertisements. A draft version offers a view from the collector’s perspective: It recommends that consumers who are victims of identify theft contact the Federal Trade Commission, but does not say that they can do the same if they have complaints about collectors. (They can.)
"You attract more flies with honey than with vinegar," the ACA foundation’s chairman, William E. Wilcox, said. "This is just a start."
There is another reason for the collection industry’s public relations push: tough economic times could bring more scrutiny of collectors by legislators and regulators.
"Collectors are in a jam," said Robert M. Hunt, a senior economist at the Federal Reserve Bank of Philadelphia, who follows the industry. "The business is so big and the anecdotes so nasty, they can’t hide." Much better, Mr. Hunt said, to take the initiative.
Even in the relatively good times in the middle of this decade, complaints about the industry consistently rose. In 2006, the most recent figures available, the Federal Trade Commission received 69,204 complaints against third-party collectors, more than quadruple the number in 2001.
Many people said the collectors misrepresented the character, amount or legal status of a debt. Others said the collector harassed them by calling repeatedly or continually, used obscene language or threatened dire consequences if no payment was forthcoming.
Collectors say the complaints are a tiny fraction of the hundreds of millions of communications a year they have with debtors, and should not be used as a lever to tighten regulation. To protect its interests, ACA International, formerly the American Collectors Association, opened a full-time Washington lobbying office this month.
Another collectors group, the National Association of Retail Collection Attorneys, has hired a leading public relations firm, Waggener Edstrom Worldwide, and started pressing its arguments on Capitol Hill.
"When changes are made by Congress or regulators, we want to make sure there are no unintended consequences," the association’s president, Robert G. Markoff, said.
Mr. Markoff’s group represents an increasingly prominent part of the debt industry: law firms that are hired by creditors or that buy delinquent accounts outright. If phone calls to the indebted person do not produce the desired results, the lawyers sue, and may seek to have paychecks garnished.
Association membership has jumped 44 percent in the last five years, to 820 law firms. It had operated in the shadow of ACA International, which is based in Minneapolis and has 5,500 members, but lately it has sought to draw differences.
"We’re trying to create an awareness that attorneys collect debt ethically," Mr. Markoff, whose practice is in Chicago, said. "To lump us in with a high school graduate who has not received similar training is not fair."
In a recent interview, Ira F. Leibsker, another Chicago collections lawyer and past president of the association, acknowledged that the notion of a friendly debt collector had its limits. "We’re trying to take people’s money from them. Let’s be honest," he said.
He cited some points rarely mentioned about the industry, like the opportunities it offers. "I have 180 employees feeding 180 families," he said. "Half if not more are single mothers, some of whom have only a high school education." His employees make $12 to $20 an hour phoning debtors.
The lawyers’ group, like ACA International, is practicing outreach of a sort. Mr. Markoff is writing a column on President Lincoln, describing an inability to pay his own bills and his time as a collection lawyer.
Mr. Markoff also believes in self-empowerment. "I’m proud to be a debt collector," he said. "I tell everyone within earshot and with my head held high."
One recent morning he was in a courtroom in Chicago, waiting for dozens of debtors to show up in response to summonses. Only one appeared: Joslyn Savage, born in 1964, married with three children.
As soon as Ms. Savage checked in with the court, Mr. Markoff took her into the hallway and sat her down on a bench.
"This is kind of old, isn’t it?" he said, holding a folder with a six-year-old bill for $2,644 from a Citibank credit card. "We’d like to see if we can settle it."
He asked questions rapidly and politely: Employed? No. Own real estate? Not in her name. Bank accounts? No. Expensive jewelry? She twisted her wedding ring. He reassured her that he was not going to take it.
Ms. Savage said her only income was her unemployment check. Mr. Markoff set up a payment plan of $100 a month and went away, satisfied with his new customer. She sat there a while longer, seeming more resigned than anything else.
"I used the money; I didn’t pay; I feel I have to pay," she said. "What can I do?"